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Trust me says Pete « Previous | |Next »
May 14, 2003

I listened to the Treasurer defend the Budget on the 7.30 Report last night. We've got a money left over over paying for the war, low debt, and so the surplus should be returned to the punters. So we get $10.7 billion on tax cuts and $1.5 billion on public funding of universities.

It is hard to question the tax cuts, for though they are across the board, they have been pitched to those on $10, 000-$27,000 income range; those who are on part-time jobs. They get a couple of dollars under $20,000, $6 up to $25,000 and $4 up to $27,000. Enough to buy a couple of issues of the Australian Financial Review. Big deal, especially when lot of the cut consists in the return of bracket creep.

But more tax cuts are promised from future budget surpluses. You can trust me to deliver on that says Pete. Look at my track record. There's next years election strategy.

You'd definitely be out of pocket if you decided to go to the regional university to acquire a bit of intellectual capital. That is the path to debt. So you'd need to be asssured that you'd get a job and that it would pay enough to pay back the education debt. That means postponing buying a house. But you cannot earn more than $62,000 because that means you are rich! So you pay 47% of your income in tax.

The answer? Take out an investor loan buy a unit and negatively gear to reduce personal income tax and acquire capital gains, which are then taxed at lower rates than the income tax.

What if the economy runs out of steam (its not a high economy) from international events.The Treasurer painted a grim and dark outlook and the Australian economy is very vulnerable to shocks from overseas. What use are tax cuts when you lose your job and houseprices nosedive?

What does all that mean? It means a transfer of spending on publci goods (education and health ) from the government to consumers. It means working harder and longer for younger workers. And for older workers? Their future of unemployment, persistent poverty and social disengagement is unlikely to change.

And the universities? They will be increassingly be run like a business with collective bargaining being displaced in favour of individual work contracts. The business ethos is not sympathetic to fundamental university research. It is geared towards directing funding to commercially-orientated research such as biotechnology. It also means concentration of research in elite corporate universities that can charge full fees for status courses. Regional universities (eg. Flinders University) will continue to rely on public funding because they do not have the prestige to charge full fees for many undergraduate courses. And the increased public spending is not only over 10 years; it does recoup the cuts made in 1996. Expect more privatisation of education as cash-strapped elite universities push for more deregulation.

What I get from it all is that consumers have to keep spending to keep the economy ticking over. To do that we consumers need confidence. We need rising house prices (they are very high now), low interest rates, low inflation reduced charges and taxes by the states (haven't they got the GST revenue stream?) and more jobs. And all that depends on a big surge in growth in the US economy.

You cannot say that this budget is brimming with vision about nation-building in a knowledge economy. It all looks as if Costello is planning to give the Treasury job the flick.

So what is Labor going to do? The Libs are going to enjoy making and watching Labor suffer from a thousand cuts.

| Posted by Gary Sauer-Thompson at 12:01 PM | | Comments (3)
Comments

Comments

Do we really need to go to university to 'increase our intellectual capital'?

You need to go to university to get a flash job as a lawyer or a doctor or an engineer- but speaking personally, I don't think my 'intellectual capital' missed out a thing by not going to university.

It's a reasonable budget is my own feeling.

Getting that flash job from uni also involves acquiring certain intellectual skills and capacities----thats the intellectual capital. It is what people are prepared to pay good money for.

You can acquire intellectual capital in other ways---the uni gives it a certificate and prestige value.

"I don't think my 'intellectual capital' missed out a thing by not going to university."

Hard to predict since you've never been to uni.